PTQ Q4 2022 Issue

pt q&a

More answers to these questions can be found at www.digitalrefining.com/qanda

Q In view of the recent wave of refinery closures, includ - ing five in the US during 2021 and other closings, what technologies and market strategies are emerging to keep plants operating? A Scott Sayles, Manager Renewables and Alternate Feeds, ssayles@becht.com, Mel Larson, Manager Strategic Consulting, mlarson@becht.com, Robert Ohmes, Division Manager Strategic Business Planning, rohmes@becht. com, Becht: US capacity lost by refinery shutdowns or conversions will approach 1.5 MMBPD by 2024. Capacity increases in Asia will exceed these closure capacities, as well as planned clo - sures/conversions in the EU market. For those assets that have been repurposed, their focus is on producing renew - able diesel and/or sustainable aviation fuel (SAF) blend - stock, often at a lower capacity. Hence, the product mix is shifted more towards distillate fuel products plus renewable co-products and away from traditional transportation fuels and byproducts. From a market strategy perspective, remaining refiners are concentrating on several possible scenarios. The first strategy is to focus on their existing operation and con - figuration to continue to produce transportation fuels and petrochemicals and delay decisions on energy transition- related investments. For those entities, maintaining safe and reliable operation is at the forefront. Hence, their focus from a technology perspective is to bring to bear advanced ana - lytics and decision-making tools and processes to ensure the asset meets reliability targets while achieving produc - tion requirements. Operating companies are applying artificial intelligence (AI) and machine learning (ML) techniques to ‘bad actor’ pieces of equipment to help address root cause failures and meet on-stream availability. Other entities are examining ways to improve their crude/feedstock selection process by enhancing their entire crude decision-making work process throughout the value chain by streamlining data flows, analysis, and decision rights across planning, sched - uling, trading, operations, maintenance, and engineering organisations. Advancements in predictive models for understanding sulphidic corrosion (via Becht’s CorrExpert tool) and stream compatibility (via Becht’s Stream Compatibility tool) are available to help expand, narrow, and/or clarify the potential crude blends that are processed in a facility and adding this layer of analysis within the current crude selection and pro - cessing process. Fundamentally, these refiners are focusing on maximising margin within the existing assets to generate cash for potential future transformations of their business. The second strategy involved the active pursuit of proj - ects and investments in the energy transition. For many of the ‘closed’ refineries in the US, these assets are in the process of or have been converted and reconfigured into

renewable feedstock processing service. Though many sites have much of the hydroprocessing and utility infra - structure for such a conversion, we are observing that many sites are being challenged by the ability to secure sufficient feedstock to operate a technically and economically viable asset. Hence, refiners are already examining more challeng - ing waste feeds, such as used cooking oil (UCO) and animal fats (Categories 1, 2, and 3). A key focus is on understanding feedstock qualities, con - taminants, and downstream processing requirements, such that many entities are either building their own pretreat - ment facilities or going into partnerships with third-party entities to provide pretreated feeds. Though pretreatment technology has existed for many years within the food and waste processing industries, these are relatively new tech - nologies for refiners and require an expansion of knowledge and capabilities within their organisation to ensure the pre - treatment asset is properly designed and operated to meet up with a more traditional refining asset. Other refiners are examining ways to decarbonise through reduction of their energy requirements as well as investment in external renewable power production and carbon capture. Still others are taking a very long-term perspective and examining the processing of used plastics and novel bio - mass feedstocks to decarbonise their products further, all of which involve a combination of known and new/novel technologies. Given the number of options available, along with technology, market, and operating risks, a holistic anal - ysis early in the project cycle is critical to define the right investment pathway and clarify the market and regulatory incentives to monetise the investment. For these refiners, a careful balance must be struck between engaging internal resources in investigating these longer-term opportunities and ensuring their existing assets meet safe, reliable, and profitable operation to generate the funding needed for energy transition efforts. A Ioan-Teodor Trotus, Segment Lead Hydroprocessing, Custom R&D Solutions, hte GmbH, ioan-teodor.trotus@ hte-company.de: Refinery closures are by no means a sign that the need for refined products is doomed to disappear. More likely, closures are related either to regional factors that make it difficult to ensure profitable operation or to a lack of flex - ibility and diversity in the product slate of those refineries. Refineries capable of switching from mainly producing fuels to increased production of petrochemicals are very likely to remain profitable for years to come. Lubes production can also be a significant source of profit for refineries. Also, refineries which produce renewable diesel or sustainable aviation fuel should be able to navigate themselves in a position to charge a premium for these products over fossil- derived diesel and jet fuels. One must balance cost and revenue to be profitable, and

PTQ Q4 2022